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Exam 5: Accounting for Merchandising Businesses

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Question 21

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The chart of accounts for a merchandising business would include an account called Delivery Expense.

A) True
B) False

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Question 22

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On March 29,customers who owe $10,500 on account to Sonic Sales Company submit payments of $4,250.Journalize this event for Sonic Sales Company.

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Question 23

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What is the major difference between a periodic and perpetual inventory system?

If the seller is to pay the freight costs of delivering merchandise,the delivery terms are stated as

Freight-in is considered a cost of purchasing inventory.

Generally,the revenue account for a merchandising business is entitled

On March 25,Osgood Company sold merchandise on account,$10,000,terms n / 30.The applicable sales tax percentage is 7.5%.Record the transaction. ​

During the current year,merchandise is sold for $117,500 cash and $241,750 on account.The cost of the goods sold is $157,400.What is the amount of the gross profit?

In retail businesses,inventory is reported as a current asset.

A buyer who acquires merchandise under credit terms of 1 / 10,n / 30 has 30 days after the invoice date to take advantage of the sales discount.

Under the periodic inventory system,the cost of goods sold is recorded when sales are made.

Journalize the following transactions for both Abbott Co.(seller)and Dalton Co.(buyer).Assume both of the companies use the perpetual inventory system. ​

When a buyer returns merchandise purchased for cash,the buyer will record the transaction as a

Merchandise with a list price of $4,700 is purchased on account,terms FOB shipping point,1 / 10,n / 30.The seller prepaid freight costs of $100.Prior to payment,$1,600 of the merchandise is returned.The invoice is paid within the discount period. Record the foregoing transactions of the buyer in the sequence indicated below,assuming a perpetual inventory system is used.

When a merchandising business is compared to a service business,the financial statement that is not affected by that change is the retained earnings statement.

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Taking advantage of a 2 / 10,n / 30 purchases discount is equal to a yearly savings rate of approximately

When comparing a retail business to a service business,the financial statement that changes the most is the

Using the following information,what is the amount of income from operations? ​ ​

Customer Refunds Payable is an account used to record merchandise returns from customers.